FOR FCC RECORD ONLY
$//King Videocable Company, Jackson, CA, MO&O, DA 94-1625//$
$/76.922 Rates for Cable Programming Service tiers/$
$/benchmark cable rates/$

                                Before the
                     Federal Communications Commission
                             Washington, D.C.

                                                          DA 94-1625


In the matter of  )
             )
King Videocable Company)      CUID No. CA0267 
Jackson, California    )
             )
Benchmark Filing To Support )
Cable Programming Service Price  )



                       Memorandum Opinion and Order

   Adopted:  December 30, 1994                  Released:  January 3, 1995

By the Chief, Cable Services Bureau:


Introduction

   1.  Here we consider a complaint about the price King Videocable Company ("King")
was charging for its cable programming service ("CPS") tier in Jackson, California, CUID No.
CA0267.  King has attempted to justify its price through a benchmark showing on FCC Form
393.  This order addresses the reasonableness of King's price only through May 14, 1994.  At
a later time we will issue a separate order addressing the reasonableness of the price after that
date.

   2.  Under the Cable Television Consumer Protection and Competition Act of 1992,
and our rules implementing it, 47 C.F.R. Part 76, Subpart N, the Commission must review
CPS prices upon the filing of a valid complaint.  The filing of a valid complaint triggers an
obligation on behalf of the cable operator to file a justification of its CPS prices.  Under our
rules, an operator may attempt to justify its prices through either a benchmark showing or a
cost-of-service showing.  In either case, the operator has the burden of demonstrating that its
CPS prices are not unreasonable.

   3.  The Commission's original rate regulations took effect on September 1, 1993.  The
Commission subsequently revised its rate regulations effective May 15, 1994.  Operators with
valid CPS complaints filed against them prior to May 15, 1994 must demonstrate that their
CPS prices were in compliance with the Commission's initial rules from the time the
complaint was filed through May 14, 1994, and that their prices were in compliance with the
revised rules from May 15, 1994 forward.  Operators attempting to justify their prices for the
period prior to May 15, 1994 through a benchmark showing must complete and file FCC
Form 393.  Generally, to justify their prices for the period beginning May 15, 1994 through a
benchmark showing, operators must use the FCC Form 1200 series.



Procedural Matters

   4.  The first valid CPS complaint was completed and served on King on December 23,
1993.  The Commission received the complaint on December 27, 1993.

   5.  King attempted to justify its CPS price through an FCC Form 393 filed on January
26, 1994.  King amended its justification on June 29, 1994 in response to a Cable Services
Bureau Order citing common deficiencies observed in benchmark filings generally.

Discussion

   6.  In its amended benchmark filing of June 29, 1994, King calculated a maximum
permitted price for the CPS tier of $6.05 per month.  However, King's actual price for the
CPS tier was $6.10 per month.  Thus, King has failed to demonstrate that its price for the
CPS tier was not unreasonable.  Furthermore, upon review of King's FCC Form 393, as
amended, we have found the following errors:

        a.  In Column G of Schedules A and C of Part III of its FCC Form 393,
   King did not correctly account for its income tax expense.  By placing entries
   in these columns, King confirms that it is a tax-paying entity (i.e., a "C"
   corporation).  However, King incorrectly calculated its income tax by simply
   applying the corporate tax rate to its return on investment.  The Commission
   has stated that tax-paying business entities must gross-up their tax entries in
   Column G of Schedules A and C (i.e., calculate the tax as a percentage of
   return on investment plus tax).  By understating its tax entries in Column G,
   an operator reduces its effective rate of return on equipment and installations
   and thereby could increase its CPS price.  We therefore recalculate Column G
   of Schedules A and C (and subsequent steps) using correctly grossed-up tax
   entries.  

        b.  In Column D of Schedule C of Part III of its FCC Form 393, King
   incorrectly entered negative deferred taxes.  We therefore recalculate Column D
   of Schedule C (and subsequent steps) using amounts which were adjusted to
   zero.  

   7.  While these errors should not have been made, correction of these errors does not
have the net effect of changing the maximum permitted monthly CPS tier price of $6.05 as
calculated by King. 

Conclusions

   8.  Upon review of the record herein, we conclude that King's showing supports a
maximum reasonable CPS tier price of $6.05 per month (plus franchise fee) for the period
December 27, 1993 to May 14, 1994.  However, we further determine that the refund at issue
is such a de minimis amount that it would not serve the public interest to order a refund.  

   9.  We further conclude that King must reflect in its FCC Form 1200 rate filing for
the period after May 14, 1994 the fact that King's prices during the earlier period were
unreasonable.  We reserve the right to make further adjustments to King's prices for the
period after May 14, 1994 upon completion of our review of King's FCC Form 1200 rate
filing.  

   10.  Accordingly, IT IS ORDERED, pursuant to Section 0.321 of the Commission's
Rules, 47 C.F.R.  0.321, that the December 23, 1993 complaint against the cable
programming service price charged by King Videocable Company in Jackson, California,
CUID No. CA0267, IS GRANTED TO THE EXTENT INDICATED HEREIN AND DENIED
TO THE EXTENT INDICATED HEREIN.

   11.  IT IS FURTHER ORDERED, that the benchmark filing submitted by King
Videocable Company with respect to Jackson, California, CUID No. CA0267, for the period
of December 27, 1993 to May 14, 1994, justifies a maximum price of $6.05 per month (plus
franchise fee) for the cable programming service tier.

   12.  IT IS FURTHER ORDERED, pursuant to Section 76.922(b)(4)(c) of the
Commission's Rules, 47 C.F.R.  76.922(b)(4)(c), that King Videocable Company shall,
within 30 days of the release of this Order, revise its Form 1200 filing with respect to
Jackson, California, CUID No. CA0267, for the period beginning May 15, 1994, to reduce the
monthly charge per tier as of March 31, 1994 for Tier 2 (Line A6b) to equal the maximum
permitted rate (plus franchise fee).

   


   13.  IT IS FURTHER ORDERED, that King Videocable Company shall place into
effect, within 30 days after its submission of the revised Form 1200 filing required above, a
CPS tier price that reflects the reduction in the CPS rate determined in this Order.  


             FEDERAL COMMUNICATIONS COMMISSION




             Meredith J. Jones
             Chief, Cable Services Bureau